Calculation methodology
• Actual fees, returns, salary, contributions and account balance are used to plot the Net Benefit model
• Account balances determined on an annual basis via the following general formula:
𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝐵𝑎𝑙𝑎𝑛𝑐𝑒𝑡
= {𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝐵𝑎𝑙𝑎𝑛𝑐𝑒𝑡−1 ∗ (1 + 𝑟𝑒𝑡𝑢𝑟𝑛)𝑡}+ {𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛𝑠𝑡 ∗ (1 + 𝑟𝑒𝑡𝑢𝑟𝑛)𝑡}
− {(𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝐵𝑎𝑙𝑎𝑛𝑐𝑒𝑡−1 + 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛𝑠𝑡) ∗ (𝐴𝑑𝑚𝑖𝑛 𝑓𝑒𝑒𝑡 + 𝑡𝑜𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑓𝑒𝑒𝑡)}
− {𝑀𝑒𝑚𝑏𝑒𝑟 𝑓𝑒𝑒𝑡 ∗ (1 − 𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑡𝑎𝑥 𝑑𝑒𝑑𝑢𝑐𝑡𝑖𝑜𝑛)𝑡}
Model assumptions
• Results are shown in future dollar terms
• Calculations are broken down into annual intervals
• Effective annual returns at the end of each yearly period to the as at date of the calculation are used.
• After-tax quarterly SG contributions are applied at the end of each calendar quarter (i.e March, June,
September, December) and is based on actual SG contribution rates of the relevant year.
• Salary is assumed to grow at 3.50% p.a. at the end of the first year and every year thereafter
• Contribution tax of 15% is assumed across all time periods assessed
• Fees and investment returns are determined on an annual basis. Data is provided by products issuers
and extracted from product disclosure statements.
• Explicit costs deducted from members’ accounts (e.g. member fee) is subject to a 15% tax allowance
• Where no sufficient return or fee history is available, no net benefit comparison will be performed
Model exclusions
• Any additional salary sacrifice, or voluntary contributions have not been considered
• Any contribution fees, entry fees, exit fees, and/or additional adviser fees have not been considered
• The cost of insurance premiums has not been considered
Fees
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